book review: the deficit myth

I recently read "The Deficit Myth" by Stephanie Kelton and found it to be an informative and thought-provoking read. One of the key takeaways from the book is that Modern Monetary Theory (MMT) is only applicable in countries that use fiat currencies and are currency issuers. This means that the theory cannot be applied in the Eurozone, at least not for individual European countries that use the euro.

The book also made it clear that a government can put as much money into the economy as they want, as long as they do not cause an excess of real resources being used, otherwise they will cause inflation. I found this reasoning to be insightful and it helped me better understand the concept of MMT.

However, I do feel that the book conflated two things. While it's true that when there is a lack of spending, causing underemployment and underproduction, the government could spend more to stimulate the economy, the book also suggests that the government controls through tax how much the population can use of the productivity. This could lead to a situation where MMT becomes a license for a government to decide what part of the annual productivity of a nation to appropriate for themselves, regardless of the stake their population holds in the real economy.

Through brutal taxation, in combination with flooding the market with new money, the government could pauperize the people yet maximize economic output by taking all of that output for itself. Without doubt, they would claim that they apply this for the good of the nation, but than, every government will say that, regardless of reality This aspect of the theory left me with some concerns, as it seems to give the government too much power over the economy and the population's well-being.

Overall, "The Deficit Myth" is an informative and thought-provoking read that sheds light on the concept of Modern Monetary Theory. While I have some concerns about certain aspects of the theory, the book has certainly expanded my understanding of how government spending and taxation impact the economy